Adam Bosworth: The State of Health Care by the Numbers: How 5 Percent of Americans Are Causing 50 Percent of Our Bills

The National Institute for Health Care Management Foundation came out with a chilling read.

Apparently, about 5 percent of us (roughly 15 million Americans) cost just less than half of what the entire U.S. spends on health care each year (roughly $1.15 trillion). Health care spending is now up to about $8,000 per person, or about $32,000 for a family of four each year, but this statistic is incredibly deceptive. It isn’t that the average family of four spends that much, it’s that the folks in the 15 million spend so much more; in fact, they average about $32,000 per person per year, and the top 5 percent of them (about 3 million people) average about $76,000 per person per year. To put this in perspective, about half of us (the lower 50 percent) only average about $233 per person per year, or less than 1/300th of what those top 3 million cost.

In fact, the percentage that the top 5 percent costs of the total is dropping, but not because they are spending less (they aren’t) but because the rest of us are starting to cost more. As the same study puts it:

“While the highly skewed distribution of spending has been markedly persistent over time, the proportion of expenditures accounted for by the highest spending groups has actually declined somewhat over the past two decades as high medical spending has spread to a broader swath of the population. For example, spending by the top 5 percent of spenders declined from 56 percent in 1987 to 48 percent in 2008.1. This flattening of the spending distribution is consistent with the well-documented increase in population risk factors – most notably, obesity – and a concomitant increase in treated disease prevalence for chronic conditions that are clinically linked to these risk factors, such as hypertension, diabetes and hyperlipidemia.”

In short, we are getting fatter and as we do, these enormous costs are spreading out to an ever-growing percentage of the population. Of the 15 million Americans who are already so expensive, about two-thirds (roughly 10 million) are under the age of 65. This isn’t old age, but rather chronic disease — and the costs are spreading to the rest of us.

As long as short-sighted politicians in New York City, those in the fattest state in the union, Mississippi, and much of the rest of the country continue to insist on everyone’s right to get this sick and this expensive, while making the rest of us pay their enormous medical costs (the mentality of moochers), we can expect this situation to steadily get worse. If we continue to pay for procedures, pills and new technology, regardless of their value in extending years of healthy life, and continue to have a litigious model, which encourages unnecessary tests and procedures, as the U.S. population continues to age, according to CNN, in about 15 years, an average family’s health care costs will exceed their income — an obvious impossibility.

Clearly, something has to give. The ACA does encourage preventative care, but this actually may increase costs since it’s defined as earlier detection of disease (tests and routine doctor visits), rather than true prevention of the disease itself, which would typically require true behavior change.

The same CNN article above quotes a friend of mine, J.D. Kleinke, arguing that it is already giving and expenses are slowing down. Maybe so, but until we face the music and change the current model to one that actually makes people pay more for reckless health behavior themselves rather than making others pay for them one they have to pay the piper, it is unclear to this writer that things will fundamentally turn around.